Doâ€™s and Donâ€™ts in dealing with collective Investment scheme

Updated on
Oct 05,2018 - 05:34:52 AM

Collective Investment scheme (CIS):SEBI has defined collective Investment scheme that .Any scheme or arrangement made or offered by any company under which the contributions, or payments made by the investors, are pooled and utilized with a view to receive profits, income, produce or property, and is managed on behalf of the investors is a CIS. Here in this post, we enumerate the Do’s and Don’ts while taking investments decisions in the context of Collective Investment scheme (CIS).

Do’s in dealing with collective Investment scheme:

Ensure that the entity operating Collective Investment scheme (CIS) has registered with Securities and Exchange Board of India (SEBI)

Check in the website of SEBI to ensure the validity of entity’s registration certification

Read the offer document of the scheme carefully. Don’t overlook any information that is disclosed therein. Especially the risk factors.

Ensure that you have read and understood the objectives of the scheme.

Check the if the project is viable where the investment is going to be made under CIS

Check and enquire about the back ground of the promoters. Don’t just go blindly with the scheme just because it is promoted by reputed individuals/entities.

Ensure that the schemes launched by the company have been compulsorily credit rated as well as appraised by an appraising agency.

Ensure that the title of the collective investment management company over the project assets is clear and marketable.

Ensure that the infrastructure of the Collective Investment Management Company is enough to carry out the project.

In case the Collective Investment Management Company has already carried many schemes in the past, check out their historical ‘promise vis-a-vis performance’ of the old schemes.

Ensure that Collective Investment Management Company has not made any defaults in the past and go through the previous annual reports filed by them with SEBI.

Refer the frequently asked questions on CIS compiled by SEBI at below URL